The British online supermarket and technology group Ocado forecast faster growth this year as it delivered annual core earnings beyond expectations.
The chief financial officer of Ocado Stephen Daintith said the loss-making group expects to make a pre-tax profit in the next six years.
Daintith said that in two to three years the company expects to generate enough income for future growth and still deliver positive cashflow.
Growth
Its growth was credited to an improved performance at its automated warehouse technology unit.
Ocado operates as an online supermarket through a joint venture with Marks and Spencer. The company also sells warehouse technology to other retailers.
It has sold the cutting edge technology to retailers including Kroger in the United States, Casino in France and Aeon in Japan.
The technology division has driven Ocado’s stock market value. The section rose to £22 billion during the pandemic but has since fallen to £4 billion.
The company said it made a pretax loss of £403.2 million for the year until 3 December 2023. This was below analysts’ estimates of a £410 million loss.
Revenue rose 9.9% to £2.83 billion.
For core earnings, Ocado returned a profit with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £54.2 million.
This again beat analyst estimates of £44 million.
Return To Profit
The improvements indicated a return to profit in the online supermarket section. It also revealed a first profit in technology solutions and stable profit in logistics.
Chief executive Tim Steiner said he was confident of “faster growth, stronger cash flows, and higher returns, in the current financial year and beyond”.
For 2023/24 financial year, Ocado has predicted revenue growth of 15% to 20% for the technology division, and an EBITDA margin over 10%.
Three automated warehouses are due to go live: two for Coles in Australia and one for Alcampo in Spain.
The retail revenue is forecast to grow in the “mid-high single digits” with an underlying EBITDA margin of approximately 2.5%.
In the logistics division, stable revenue and earnings are forecast.
The group ended 2023 with £1.2 billion liquidity, and forecast capital expenditure of about £475 million in 2023/24.
